Correlation Between Barrick Gold and Taiwan Semiconductor
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Taiwan Semiconductor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Barrick Gold and Taiwan Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrick Gold Corp and Taiwan Semiconductor Manufacturing, you can compare the effects of market volatilities on Barrick Gold and Taiwan Semiconductor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Barrick Gold with a short position of Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Taiwan Semiconductor.
Diversification Opportunities for Barrick Gold and Taiwan Semiconductor
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barrick and Taiwan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Taiwan Semiconductor Manufactu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor and Barrick Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Barrick Gold Corp are associated (or correlated) with Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Barrick Gold i.e., Barrick Gold and Taiwan Semiconductor go up and down completely randomly.
Pair Corralation between Barrick Gold and Taiwan Semiconductor
Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Taiwan Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.33 times less risky than Taiwan Semiconductor. The stock trades about -0.09 of its potential returns per unit of risk. The Taiwan Semiconductor Manufacturing is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,990 in Taiwan Semiconductor Manufacturing on September 3, 2024 and sell it today you would earn a total of 2,476 from holding Taiwan Semiconductor Manufacturing or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Taiwan Semiconductor Manufactu
Performance |
| Timeline |
| Barrick Gold Corp |
| Taiwan Semiconductor |
Barrick Gold and Taiwan Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Taiwan Semiconductor
The main advantage of trading using opposite Barrick Gold and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Taiwan Semiconductor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Taiwan Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Kinross Gold | Barrick Gold vs. Gold Fields Ltd | Barrick Gold vs. Franco Nevada |
| Taiwan Semiconductor vs. NVIDIA | Taiwan Semiconductor vs. Intel | Taiwan Semiconductor vs. Marvell Technology Group | Taiwan Semiconductor vs. Micron Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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